Acceptable Quality Level - AQL

AAA

DEFINITION of 'Acceptable Quality Level - AQL'

A statistical measurement of the maximum number of defective goods considered acceptable in a particular sample size. If the acceptable quality level (AQL) is not reached for a particular sampling of goods, manufacturers will review the various parameters in the production process to determine the areas causing the defects.


The AQL is an important statistic to companies seeking a Six Sigma level of quality control.

INVESTOPEDIA EXPLAINS 'Acceptable Quality Level - AQL'

The AQL of a product can vary from industry to industry. For example, medical products are more likely to have a more stringent AQL because defective products can result in health risks. Companies have to weigh the added cost associated with the stringent testing and potentially higher spoilage due to a lower defect acceptance with the potential cost of a product recall.

RELATED TERMS
  1. Taguchi Method Of Quality Control

    An approach to engineering that emphasizes the roles of research ...
  2. Total Quality Management - TQM

    The continuous process of reducing or eliminating errors in manufacturing, ...
  3. Quality Control

    A process through which a business seeks to ensure that product ...
  4. Six Sigma

    A quality-control program developed in 1986 by Motorola. Initially, ...
  5. Flight To Quality

    The action of investors moving their capital away from riskier ...
  6. Supply Management

    A broad term describing the various acts of identifying, acquiring ...
Related Articles
  1. Fundamental Analysis

    Measuring Company Efficiency

    Three useful indicators for measuring a retail company's efficiency are its inventory turnaround times, its receivables and its collection period.
  2. Fundamental Analysis

    Inventory Valuation For Investors: FIFO And LIFO

    We go over these methods of calculating this component of the balance sheet, and how the choice affects the bottom line.
  3. Entrepreneurship

    Getting To Know Business Models

    Learning how to assess business models helps investors identify companies that are the best investments.
  4. Economics

    Do Cheap Imported Goods Cost Americans Jobs?

    Flooding the market with cheap products can mean job losses and even market collapse - but dumping isn't as threatening as it seems.
  5. Taxes

    What is the best method of calculating depreciation for tax reporting purposes?

    Learn the best method for calculating depreciation for tax reporting purposes according to generally accepted accounting principles, or GAAP.
  6. Fundamental Analysis

    Are accounts receivable used when calculating a company's debt collateral?

    Learn how accounts receivables are recorded as assets on a balance sheet; they are used when calculating a company's total debt collateral.
  7. Fundamental Analysis

    Work In Progress (WIP)

    Work in progress, also know as WIP, is an asset on the company balance sheet. WIP is the accumulated costs of unfinished goods that are currently in the manufacturing process.
  8. Fundamental Analysis

    What is the difference between cost of equity and cost of capital?

    Read about some of the differences between a company's cost of equity and its cost of capital, two measures of its required returns on raised capital.
  9. Fundamental Analysis

    Is depreciation only used for tangible assets?

    Learn if tangible assets can be depreciated, as well as what other assets are eligible for depreciation so you can account for them accurately.
  10. Fundamental Analysis

    What does a high weighted average cost of capital (WACC) signify?

    Find out what it means for a company to have a relatively high weighted average cost of capital, or WACC, and why this is important to lenders and investors.

You May Also Like

Hot Definitions
  1. Command Economy

    A system where the government, rather than the free market, determines what goods should be produced, how much should be ...
  2. Prospectus

    A formal legal document, which is required by and filed with the Securities and Exchange Commission, that provides details ...
  3. Treasury Bond - T-Bond

    A marketable, fixed-interest U.S. government debt security with a maturity of more than 10 years. Treasury bonds make interest ...
  4. Weight Of Ice, Snow Or Sleet Insurance

    Financial protection against damage caused to property by winter weather specifically, damage caused if a roof caves in because ...
  5. Weather Insurance

    A type of protection against a financial loss that may be incurred because of rain, snow, storms, wind, fog, undesirable ...
  6. Portfolio Turnover

    A measure of how frequently assets within a fund are bought and sold by the managers. Portfolio turnover is calculated by ...
Trading Center